|
| Forex Trading Made Easy - 4x Information |
| Home Page | Site Map | Today's News | Contact Us |
 |
How Currencies are Traded in the FOREX Market
Currencies are traded in dollar amounts called "lots". At 100:1 leverage, one lot is equal to $1000 which controls $100,000 of a given currency. This leverage is known as "margin" and some brokers will allow traders even higher leverage than 100:1. This superhigh leverage is one of the reasons that Forex trading has become so popular. Currencies are always traded in pairs. Each pair has unique notation that expresses which currencies are being traded. The symbol for a currency pair will always be in the form ABC/XYZ. ABC/XYZ is not a real currency pair, just an example of how currency pairs are stated in the market. In this particular example, ABC is the symbol for one country's currency and XYZ is the symbol for another country's currency. Listed below are some common symbols used. There are symbols for other currencies as well, but these are the most commonly traded ones. USD - The US Dollar As mentioned earlier, currencies are traded in pairs in Forex trading. Thus, a trade always compares one currency to another in terms of how the two currency prices will move relative to each other. Some of the common pairs traded are: EUR/USD Euro / US Dollar When you place an order to buy the EUR/USD, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency pair, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency. In Forex trading, currencies are traded on a price interest point (know as a "pip")system. Each currency pair has its own pip value. Since we have a listed currency pair (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a price quote, you'll see something listed like this: USD/JPY: 118:51/55 The first component (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.51. The second component (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.55. The difference between the bid and the ask price is referred to as the spread. In the example above, the spread is .04 or 4 pips. Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trading-FOREX.htm
MORE RESOURCES:
|
|
|
|
Earn 30% Each Month RELATED ARTICLES Forex Training: Follow Your Gut or Your Broker Which way will the forex market move? Do you just follow your gut feeling? Or do you have Neo's sixth sense that would let you be one with the market and feel the underlying currents.Trading forex is a non stop action movie but a good one, where you really don't know who will win at the end. Online Forex Q1: When you consider that the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily, where does it go from here?A1:The FX market is unique, in the UK there is no central exchange, we trade via the inter bank market. Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career. You know the old joke:"How do you make a million in the stock market? Start with two million?"There is no way around it, risk and stock market fees are a part of trading that you can`t avoid. But, you can manage your risk. 5 Questions You Need To Have Answered Before You Back-Test Your Forex System As 90-95% of new forex traders lose money within the first 3-6 months this article helps to guide new forex traders by asking 5 questions that the forex trader needs to know prior to back-testing their forex system.Let us jump right in. Trading Tips No 1: Learn How to Trade The Moment of Truth So you have learned how to trade the markets by mastering a few trading tools like Moving Averages, Channels, Stochastics, MACD, or RSI - that is a great accomplishment achieved by only a few. However, having the tools and rules to trade markets successfully, year in and year out, is only half of the challenge. Advantages of Trading FOREX Over Stocks and Commodities There are many advantages to Trading FOREX as your main income generator. Let's start by something that may be worrying you already. Where is the Market Going? If you ask me whether the market will have moved up or down by this time next year, well I may as well flip a coin, because I don't know.If you ask me whether the market will have moved up or down by this time next month, well again, I may as well flip a coin, because I still don't know. The Miracle of Forex My father, who owns a small parts store and garage for vintage British sports cars, called me up recently and droned on and on about how he is getting killed by the Euro. Confused as to how the Euro could possibly be affecting his small and seemingly insignificant business, I asked him how. What are Your Options Regarding Forex Options Brokers? Forex option brokers can generally be divided into two separate categories: forex brokers who offer online forex option trading platforms and forex brokers who only broker forex option trading via telephone trades placed through a dealing/brokerage desk. A few forex option brokers offer both online forex option trading as well a dealing/brokerage desk for investors who prefer to place orders through a live forex option broker. Stopping Yourself I read on a bulletin board a traders comment that on his first outing trading the E-Mini S&P 500 he lost on each of his trades. He noted though, that had he had a wider stop each of his trades would have been profitable and that therefore he would be trading with a wider stop in future. Types of Foreign Currency Hedging Vehicles The following are some of the most common types of foreign currency hedging vehicles used in today's markets as a foreign currency hedge. While retail forex traders typically use foreign currency options as a hedging vehicle. Day Trading Training ... You need more than just going to a free stock market workshop to learn Day trading is all about making buy and sell decisions. When you make a trade either your going to lose money or your going to make money, and some other times you will break even. Forex Broker Involvement Optional To trade on the forex market, the largest financial market on the planet, one must use a forex broker. Not unlike a stock broker, a forex broker can also makes suggestions about which moves to make when exchanging foreign currency. What I Learnt Losing £60,000 My First Year as a Full-time Trader During my first year as a local (independent trader) on the floor of LIFFE, I bought and sold 8804 FTSE futures contracts, about 40 contracts per day on average. The result was a loss of £61,620 or -£267 per trading day. How To Handle A String Of Losses Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing. Writing A Trading Plan All professional traders have a trading plan. Trading futures is a zero sum game and those with a plan (and the discipline to apply it) will succeed over those that have no plan. Where to Get Forex Training For those of you who are interested in forex trading, you may want to start off by getting some good forex training. Forex training is a necessity for anyone with this interest. Mechanical or Discretionary Trading - Which is Best? Discretionary TradingPure discretionary trading will rely solely on the traders judgement. For example a discretionary trader may spot a particular pattern developing on a chart and decide to enter a trade on that basis. How to Trade Currency We all know when you go on a trip to another country; you need to take some travelers checks and some cash in the currency of that country. This can be advantageous because one country's currency is usually worth more or less than the other. Day Trading Course or Day Trading Technique Seminar: Learn Day Trading Education Profitable day traders recognize that momentum trading is among the fastest & most effective ways to harvest BIG piles of cash in the stock market.The problem is that if you don't know what stocks to look for and how to approach them while limiting your risk, you won't even get close to making some profits.
|
|
||||
| © 2006 Forex Traders Network * PO Box 110422 * Denver CO 80231 | ||||
